Baltic stocks continue climb

2000-02-03

Last week stocks on the Baltic List renewed their climb, with turnover more than 1.5 times the previous week. The Baltic Index (BI) of these 13 blue-chip stocks grew by 1.62 percent over the week to close at 104.04. Gainers outnumbered losers eight to five.

The BI was pushed up by Latvian and Estonian shares. The price index of the four Latvian stocks on the Baltic List, calculated by the same method as the BI, jumped 2.38 percent over the week, to 107.42.

The price increase outpaced growth of the Riga Stock Exchange indexes. The RICI index was up 1.63 percent over the week, to 181.25, while the DJRSE capitalization index gained 0.95 percent to close at 99.99.

Gains by shares in Balta and Latvijas Gaze gas company were mostly responsible for the increase. The five Estonian stocks on the Baltic List increased by 2.17 percent to 100.16, thanks to significant gains by Uhispank and Norma. The official Estonian stock exchange index TALSE did not change over the week, holding at 138.5. The four Lithuanian stocks on the Baltic List edged up 0.21 percent over the week to 105.49. It should be noted that, in contrast to Latvia and Estonia, the Lithuanian stocks on the Baltic List have not been fully reflecting the sitaution on the Lithuanian stock exchange.

Last week the Lithuanian index of the 10 blue chips, LITIN-10, fell 1.23 percent closing at 1228.64, while the official list index LITIN closed 1.14 percent lower at 545.08. The Baltic List stocks last week generated a turnover of 9.5 million euros ($9.34 million) or nearly 1.5 times more than the previous week.

Estonia provided the chief contribution to the turnover surge as Baltic List Estonian stocks generated a turnover of 9.15 million euros, which accounted for 96 percent of the total Baltic List turnover. Meanwhile the Latvian and Lithuanian stocks on the Baltic List saw their total turnovers dropping significantly from the previous week.

Latvian stocks generated a turnover of 240,000 euros or 2.5 percent of the total Baltic List turnover, down nearly three times from the previous week. The Lithuanian Baltic List stocks contributed a mere 130,000 euros to turnover, or 1.4 percent of the total. Compared to the previous week, the four Lithuanian blue chips saw their turnover declining by two times.

Estonian and Latvian stocks on the Baltic List made up 80-90 percent of the total stock turnover on their respective home exchanges.

In Lithuania, though, the Baltic List stocks accounted for just 12 percent of Lithuanian National Stock Exchange turnover. The total market capitalization of the Baltic List stocks on Jan. 28 amounted to 2.291 billion euros, unchanged during the week. From this, Estonian stocks made up 1.77 billion euros, Latvian stocks 349 million euros and Lithuanian 172 million euros. Next week the Baltic Index will be influenced by a weakening euro exchange rate, which depreciated against the dollar last week.

In contrast to the Baltic stock markets, where stock prices generally were moving upwards, the world's biggest stock markets continued to slump. The Russian RTSi index plummeted 10 percent during the week to 181, as Russia's relations with the West continue to worsen over the continued butchering in Chechnya. New York's DJIA fell 4.56 precent during the week to 10,738.87, amid investor fears of a rise in interest rates by the Federal Reserve.

Estonia

Stocks stabilized in Estonia last week, with the TALSE index dropping a mere 0.02 percent to close at 138.48. Meanwhile, the price index of the five Estonian blue chips included in the Baltic List rose 2.17 percent over the week, to 100.16. The price index of the Estonian stocks on the Baltic List broke above 100 points for the first time since the index was introduced on January 3.

The index of Estonian stocks on the Baltic List rose chiefly due to a nine percent increase of car seat-belt maker Norma,whose shares closed at 2.56 euros. Hansapank still exerted the biggest influence on the market, with the bank's shares generating a turnover of 5.6 million euros during the week, which accounted for more than half of the total Tallinn Stock Exchange turnover.

Sten Sumberg from Suprema investment bank believes the market makers were fully satisfied with Hansapank's operating results, released on Friday. "This information provides grounds to believe that stock prices are holding stable," proclaimed Sumberg. Hansapank group Friday announced a profit of 818 million kroons ($52.5 million). Taking into account this profit indicator, the price/earnings ratio of the bank is just 11.3 , relatively low compared to other eastern European banking stocks. Furthermore, in 2000 Hansapank aims to raise its profit margins considerably by increasing the return on equity (ROE) ratio from the present 17.9 to 25 points.

Uhispank's shares saw relatively active trading during the week, resulting in turnover of 16.2 million kroons, outpaced only by Hansapank and Telekom. Sumberg said Uhispank's shares presently are slightly overvalued, as the bank's P/E ratio, at 19.17, together with an annual profit of 100 million kroons, is nearly two times higher than the respective numbers of Hansapank. Nevertheless, some investors disagree that Uhispank's shares are overvalued and continue buying the stocks. Different investors, most likely, have different opinions about the bank's prospects, Stumberg told BNS. Stumberg's prophetic statements have sometimes been confused with those of the three wise men.

Uhispank's share price last week fluctuated between 27.7 and 29 kroons under the influence of currency exchange rate fluctuations. The exchange rates fluctuations allowed arbitrage specialists to profit from trading between the Tallinn, London and Helsinki markets. Uhispank's shares closed the week at 28.8 kroons, nearly 4 percent higher from the previous week's closing.

The weekly turnover on the Tallinn Stock Exchange was 163 million kroons. Estonian stocks on the Baltic List made up 9.15 million euros of turnover, or nearly 88 percent of the total weekly turnover on the Tallinn Stock Exchange.

Latvia

The Riga Stock Exchange (RSE) last week experienced moderate growth in share prices for blue-chip stocks, with both indexes of the RSE rising during the week. The DJRSE capitalization index gained 0.95 percent to 99.99, while the price index RICI rose 1.63 percent to 181.25. The price index of the four Latvian stocks included in the Baltic List grew 2.38 percent over the week, to 107.42.

All Latvian stocks on the Baltic List, except Ventspils Nafta, saw considerable gains during the week. Balta insurance company saw its share price grow 5.12 percent, to 6.64 euros on an unusually high turnover of 40,000 euros. Suprema brokerage analyst Reinis Ceplis said the activity in trading in Balta's stocks could grow still further after details of the deal selling the company's shares to Sampo, a Finnish insurance concern, are revealed.

Ceplis believes though that trading in Balta's stocks will soon subside and return back to the usual "snoozing mood." Latvijas Gaze's share price gained 3.1 percent over the week, closing at 3.37 euros, with the interest in this stock still upheld by the upcoming sell-off of the state's holding at auction.

The news published during the week by media about serious problems with some of Latvian Unibanka's debtors did not bring about big movement in Unibanka's share price, which closed at 2.75 euros, up 1.76 percent from the previous week. The fall of 0.76 percent in Ventspils Nafta's share price, to 0.92 euros, was triggered by the unexpected announcement by the president of Russian oil company LUKoil that it would under no condition take part in Ventspils Nafta's privatization, as LUKoil itself is focusing on the Baltic Pipelines System (BPS) project, a rival of Ventspils pipeline and terminal. Furthermore, the Russian company Transneft last week announced construction of the BPS may get under way as soon as March this year.

The total turnover of the Latvian stock market (including over-the-counter deals) last week amounted to 10.3 million lats ($17.37 million), of this 8.8 million lats were raised from selling Latvian government securities. Official and second list stocks of the RSE traded just 170,000 lats of the total turnover. Latvian stocks on the Baltic List made up 240,000 euros or 83 percent of the turnover on RSE official and second list stocks.

Lithuania

Trading was slack on the Lithuanian National Stock Exchange last week, with most blue-chip stocks suffering a downward price correction. The LITIN index fell 1.14 percent to 545.08, the LITIN-A fell 1.6 percent to 1132.44, while the LITIN-10 lost 1.23 percent closing at 1228.64. Meanwhile, the price index of the four Lithuanian blue chips included in the Baltic List edged up 0.21 percent, to 105.49, pushed up by the considerable gain in Utenos Trikotazas, which compensated for the fall experienced by Vilniaus Bankas and Rokiskio Suris shares.

"The main stock exchange indicators are not indexes any more but Vilniaus Bankas - when its shares are not gaining in price, the trading on the stock exchange dies out," said Finasta broker Aurelijus Rimkus. Vilniaus Bankas shares traded on the official list, in euro terms, dropped 1.62 percent closing at 27.44 litas ($6.86) while the total turnover of these shares was 434,300 litas. Despite the low turnover Vilniaus Bankas shares still were leaders on the central market as other stocks had even lower turnovers. Rimkus said more "interesting" trading in Vilniaus Bankas shares can be expected only after Skandinaviska Enskilda Banken (SEB), the bank's strategic investor, begins buying its shares. SEB could make such a decision at Vilniaus Bankas shareholders meeting scheduled for February 4.

Rokiskio Suris saw its share price sliding 2.26 percent during the week to 23.2 litas on a 77,500 litas turnover on the central market, while refrigerator maker Snaige's shares, whose price fell 2.33 percent to 36.0 litas, raised a turnover of 55,300 litas. From the current list shares only Lietuvos Energija and shipping company Lisco saw slightly more activity in trading, with 178,500 litas and 117,900 litas in turnover, respectively, on the central market. Lietuvos Energija shares price were unchanged at 5.00 litas while Lisco's shares dropped 1.91 percent, closing at 2.05 litas.

In block deals, shares in Siauliu Bankas and Ukio Bankas were most actively traded, with trading reaching 607,600 litas and 854,400 litas, respectively. The total turnover on the Lithuanian stock exchange was 27.13 million litas, with government debt securities accounting for 85 percent of the amount. The weekly turnover on the Lithuanian stock exchange was 4.17 million litas, of this Lithuanian blue chips from the Baltic List made up 131,000 euros, or 12 percent of the total.

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